SodaCanyonRoad | The direct-to-consumer boondoggle

The direct-to-consumer boondoggle

George Caloyannidis | Apr 17, 2015 on: Tourism Issues

The Direct to Consumer Sales Model, April, 2015.

The premise that the wine sales model has changed, requiring direct sales for wineries to survive, which the County believes is basically false. For it to be understood in terms of implementing policy, it must be recognized for what it is and separated into its different components.

While in Los Angeles, I spoke to two people in the wine distribution, brokerage, retail and import trade. They have been at it for as long as I have known them; 40 years.
The 3-tier sales system is alive and well. No new laws have changed it.

What is true is that the number of distributors has become smaller due to consolidation and the large distributors prefer large volume wineries. Though fewer, they sell more wine than ever before.

However, the slack has been picked up by many more wine brokers who handle smaller wineries. Scores of them would love to sell the many wines that wineries choose to sell directly to customers.

But, just as before, direct sales are more profitable, eliminating the middle tier costs of storage, commissions etc. Nothing new.

There are two ways to sell wine direct: One is benign and one is destructive.

Direct sales are easier to implement than they have ever been. In addition to winery trade tastings, winemaker dinners at markets around the country, the internet has provided a powerful new tool for developing a direct sales data base and increased winery profits.

Trade tastings and winemaker dinners involve travel and hard work which the new winery owners are not willing to engage. They prefer the easier way and have convinced the County that this is an issue of survival. And the County keeps accommodating them with increased visitation rights. It is a short sighted policy.
Direct sales as such have no direct impact on the valley. Entertainment at the wineries is another story.

The concept of bringing the customer to the winery, instead of taking the winery to the customer is not the result of "the changing marketing reality". It must be recognized for what it is [event related] and the consequences it has for everyone.

More tourist traffic and more hotel rooms, the primary drivers of an accelerating low wage job market, create more commuter traffic, diminished quality of life, more use of the infrastructure and its deficit maintenance/expansion/replacement costs which are borne by the community at large. All for the benefit of very few who are not willing to put in the work.

Any formula which increases the number of winery visitors unleashes this destructive chain. Tying visits to production levels will only increase the applications for increased productions.

This chain of consequences gradually transforms the agricultural character of the valley to one of retail entertainment. It is a slippery slope and it lies at the root of the increased search of new definitions and variances, around what constitutes agricultural or commercial use.

We should not be having this debate.